Tax Credits: Backdating

In certain circumstances tax credits claims can be backdated. This section of the website provides information about when claims can be backdated as well as links to HMRC guidance about the backdating process.

The information below was written by the Low Incomes Tax Reform Group.

Standard backdating

An initial claim can be backdated if the circumstances entitling the person to tax credits have subsisted for the period of the backdating. But a claim may generally only be backdated by a maximum of 31 days. Prior to 6 April 2012, the backdating period was 93 days.

Changes of circumstances can be backdated up to 1 month. Prior to 6 April 2012, the backdating period for changes of circumstances was 3 months.

Backdating more than 31 days/1 month

There are two situations in which it is possible to get backdating of more than 31days/1 month:

Refugee status

If a person has claimed asylum as a refugee and is then awarded refugee status, providing they apply for tax credits within one month of receiving notification of that refugee status, they will be treated as if they made their tax credits claim from the original date they claimed asylum. Prior to 6 April 2012, refugees had 3 months from being awarded refugee status to inform HMRC and receive longer backdating.

Example 1

Faizah claimed asylum as a refugee on 12th May 2008 and was granted refugee status on 10th April 2012. She applies for tax credits on 8th May 2012 (within one month). The claim for tax credits is treated as being made on the date she claimed asylum (12th May 2008).

Example 2

Zabia claimed asylum as a refugee on 28th September 2008 and was granted refugee status on 10th April 2012. She applies for tax credits on 29th May 2012 (more than one month after notification of her refugee status). Her tax credits are backdated by only 31 days from the date she applied.

It is important to note that any backdated amount due will be reduced by any support received under the Immigration and Asylum Act 1999 (such as NASS payments) unless any DWP backdating has already been reduced to take these payments into account.

Disability elements

Backdating is also possible by more than 31 days/1 month where entitlement to one of the disability elements is dependent upon an award of a qualifying benefit. The rules for backdating disability elements changed on 6 April 2009.

Prior to 6 April 2009, when applying for tax credits, HMRC asked claimants to attach a letter to the claim form if they had applied for one of the qualifying benefits but had not yet received a decision. Providing they then notified HMRC within 93 days of the award of that qualifying benefit, backdating should have been given to the date from which the disability benefit was awarded or from the date of claim whichever was the later.

If there was an ongoing tax credits award, the claimant had to notify HMRC both when they applied for the qualifying benefit and then again within 3 months of it being awarded in order to receive backdating of more than 3 months.

From 6 April 2009, providing the claimant notifies HMRC within 1 month (3 months prior to 6 April 2012) of being awarded the qualifying benefit, they will receive full backdating. There is no need to tell HMRC when they apply for the disability benefit.

Similarly, if their claim for tax credits is dependent on the qualifying benefit, providing they claim within 31 days (93 days prior to 6 April 2012) of being awarded the benefit they can receive full backdating.

Example of the old rules (prior to 6 April 2009)

Sandra is claiming tax credits. She applies for disability living allowance for her daughter Amy in April 2007. If awarded then Sandra will be entitled to have the child disability element included in her claim. Unfortunately the disability living allowance decision takes 6 months and Amy does not receive notification of her higher rate mobility award until October 2007.

Providing that Sandra notified HMRC that she claimed Disability Living Allowance in April 2008, and again notified them within three months of the award in October 2008, Sandra will receive backdating of the Disability element to April 2008.

However if Sandra failed to notify HMRC that she had applied for Disability Living Allowance for Amy in April 2008, she would only be able to claim three months backdating from October 2008.

Example of the new rules (from 6 April 2009)

If Sandra applies for Disability Living Allowance for Amy in April 2012, and it is not awarded until October 2012, providing Sandra tells HMRC of the award of DLA within 1 month she will receive backdating of the disability element to April 2012.

She is not required to tell HMRC in April 2012 when she applies for DLA.

How to claim backdating

Most awards of working tax credit (WTC) and child tax credit (CTC) are backdated automatically. CTC claims are normally backdated to the date of birth of the child, or by 31 days, whichever gives the shorter period.

If the claimant is returning to work after leaving benefits and claiming WTC, then it is likely that you will receive automatic backdating. However, those who are claiming WTC for the first time will not receive automatic backdating and must request it.

There is currently nowhere on the claim form to ask for this backdating. The claimant should attach a letter to their claim form requesting backdating. Alternatively, they should contact the helpline and ask them for the backdating. They should refer the request to the backdating team in the Tax Credit Office. If this does not happen, the claimant should ask to make a complaint and should submit an appeal against their first award notice. The appeal should explain why they think the award should have started on an earlier date.

In the past, HMRC have not explained to claimants that they may be entitled to backdating or how to claim it. This was particularly a problem for WTC only claimants who may have missed out on up to 3 months of backdating. HMRC have amended the claim form notes and other materials for the 2011-2012 and subsequent tax years, however there are no plans to go back and give backdating to those who may have missed out. HMRC have confirmed that they will give backdating in those cases where a claimant missed out and makes a request for it. LITRG have published a useful guide which explains who is affected with a form to complete and send to HMRC to ask for WTC backdating to be applied in those older cases. Under statute, the absolute time limit for doing so is five years from the date of the decision (under Section 21 Tax Credit Act 2002 using the official error process, although in some cases where the decision is dated in the last 13 months it may be possible to use the appeal route. Outside of this time limit, it may be possible to argue for compensation if the claimant missed out on backdating due to HMRC wrong information. Claimants or their advisers should use the form in the LITRG guide.

in the first instance to request the missing backdating. If the appeal time limit is still open, you can follow the guidance in our appeals section.

Restrictions on backdating

When the Tax-free childcare scheme is introduced, claimants receiving tax-free childcare cannot also receive tax credit for the same period. The rules, found in SI 669/2015, mean that backdating of tax credits will be restricted to prevent tax credits being backdated to cover a period where the claimant (or either claimant) has previously been in receipt of or made a declaration of eligibility for tax-free childcare payments. See our tax-free childcare section for more information about the scheme.
 

More information about backdating

The following information about backdating is contained in the HMRC manuals online:

General backdating information (Tax Credits Technical Manual)

Updated 23 May 2016